The Case For And Against Software And Business Model Patents

from the and-the-battle-begins dept

Things have been busy, so I haven't been able to add to my ongoing series of posts on intellectual property until now. I've also been working on a post for the series that is a bit involved, which has taken extra time. However, just as I'm working on finishing that up, the various friend of the court briefs on the Bilski case were due, which is a perfect opportunity to discuss the question of business model and software patents. Back in February, we mentioned that the Bilski case was a big deal, as it gave the appeals court that handles patent issues (CAFC) a chance to admit it made a mistake in allowing patents on software and business models. Some of the various individuals and groups who filed briefs have written about them, but Dennis Crouch over at Patently-O has an excellent summary and many of the amici briefs available for download.

As you might imagine, with 30 different amici briefs filed, they represent a wide variety of opinions, with some companies like Accenture and American Express in favor of allowing these patents, and others like IBM and SAP explaining why these patents don't make much sense. Red Hat (expectedly) explained how software patents harm open source development (and how open source shows that patents aren't necessary for software innovation). The group End Software Patents highlighted some ridiculous lawsuits resulting from software patents (and even noted that CAFC's own website violates some software patents). The EFF focused in a bit more on the very specifics of the argument at hand and suggested a three-step litmus test to determine whether an invention is actually technological.

So How Come Software And Business Models Are Patentable In The First Place?

For many years people simply assumed that software and business models weren't patentable. It was pretty well established that patents needed to be tied to a real, tangible technology -- even if there didn't need to be a working model. The courts had recognized for many years that a "process" could be patentable, and that was codified in the law in 1952 by the patent act written by Giles Rich. Rich later went on to serve on CAFC interpreting the very law he had a major hand in writing, almost always in favor of extending what could be patented.

In 1981 the Supreme Court ruled in the Diamond v. Diehr case, saying that the patent office shouldn't dismiss a patent application just because it's software, noting that if it was tied to a technology, then the entire combination of technology and software could be patentable. It made it clear, however, that algorithms, by themselves, were not patentable. That's somewhat problematic, as it assumes a concrete world where the technology and the algorithms aren't mixed together. Following this, most decisions on patents were left to CAFC, who went through a series of cases trying to refine and hone in on what was and was not patentable when it came to software. This went on until 1998 when CAFC decided the State Street case, which basically said both software and business models are patentable -- and that they've always been patentable, quoting a phrase first used in a Congressional report in 1952 that "anything under the sun made by man" is patentable. This statement has all sorts of problems, of course, because when you get into intangible goods and algorithms and business models, it's not always clear if that's something "made by man" or merely an explanation of something that was already there. Either way, the State Street decision opened the floodgates.

Suddenly there was a massive rush to the patent office to apply for both business model and software patents. Researchers, for example noted that from 1995 (before the lower court ruled on State Street) to 2001 (two years after the Supreme Court refused to hear State Street) the number of business method patents grew by nearly 3,000% (yes, 3,000%). Things became even worse because there were so many fewer software and business method patents prior to this case, patent examiners had much less "prior art" to go on. Typically, examiners use things like earlier patents as well as journal articles to determine prior art. But, there weren't patents on earlier software and business models and not many journal articles either. So plenty of bad patents got through. The patent system itself became overwhelmed, and the incentive structure started encouraging examiners to approve patents when it doubt. And that's how we got to some of the mess we're in today.

The Case For Software and Business Model Patents

Let's start with the case being made in favor of such patents. Again, with so many amici, there are a ton of different opinions offered here (and they certainly don't all agree with each other). But the simplest argument being made is reflected in the BSA's opening argument which is the same core defense of the patent system overall. It goes like this: patents are supposed to promote the progress, and we want progress promoted, so of course software and business models should be patentable. This argument, obviously, ignores the question (and all of the evidence) suggesting that patents don't actually promote the progress, but we'll leave that aside for now. Related to this, companies like American Express and Accenture trot out the claim that patents have tremendous beneficial impacts on the economy (again, without proof).

From there, a few of the briefs jump off into claims about how our modern economy is different than in the past. Rather than tangible goods and manufacturing, we're now a society of services and intangible goods, leading to the claim that if patents were helpful in those old days, they should also be extended to this new economy. Regulatory Data Corp. takes this point a step further by claiming in its second argument that "applied economics" is a part of "the useful arts" that are supposed to be protected under patent law. RDC, by the way, also has a bit of fun at the beginning of its brief talking about how its software stops terrorists, hinting at the idea that without patents, the terrorists would win. Many of these briefs also argue on the precedent of prior cases and the idea that creating a specific "exemption" from patentability is a bad thing and would do more harm than good.

Effectively, the arguments are:

Innovation is good, patents encourage innovation, therefore, of course patents should apply to software and business models.

The world we live in is different than it was in the past. When patents were first conceived of, everything was mechanical and tangible, but the world is different now. This argument, effectively suggests that intangible things (software, business models) don't have any different characteristics than tangible things (which is absolutely incorrect, but it sounds good).

Courts have held (and the law has been changed to reflect) that processes can be patented, even if ideas cannot be. Software and business models are processes, not ideas.

Anything under the sun made by man can be patented, and software and business models are made by man.

Drawing dotted lines about what is and what is not patentable decreases the flexibility of the system and makes it ineffective (which I believe is the strongest argument made in these briefs).

The Case Against Software and Business Model Patents

For folks who read Techdirt and work in the software industry, I'm sure the basics won't come as much of a surprise. The arguments revolve around the fact that you're not supposed to be able to patent an idea -- and then making it clear that software and business models by themselves are really just ideas. They need to be tied to some sort of tangible technology to actually be considered patentable. Microsoft, Dell, Symantec, IBM, SAP and others all make that point. The EFF takes things a bit further to suggest its test for whether or not something is "technological." The EFF also highlights how much harm patents on purely non-technological material may cause -- noting that it limits the normal delivery of important information. The ACLU picks up on this as well, suggesting in its brief that software and business model patents fundamentally run the risk of violating one's First Amendment rights and argues that First Amendment rights should trump patent rights.

Effectively, the arguments are:

You cannot patent an idea, and business models and software are really ideas, not technology or processes.

There needs to be some actual technology for it to be patentable

There is real economic harm being caused by these types of patents

Software and business models, due to being intangible, work differently than tangible goods, and therefore do not need patent protection for innovation -- and, in fact, such protection can harm them.

The fact that these patents can get in the way of the Freedom of Speech should be a concern

There are many more arguments made within the briefs, and you can dig into them if you'd like -- but I believe that's a decent summary of both sides.

So Should The Court Get Rid Of Software And Business Model Patents?

To be honest, this question is a lot trickier than it sounds at first, and my answer may surprise some people. Part of the issue is how you look at the question being discussed -- and on this I agree with some (though definitely not all) of what Stanford professor Mark Lemley wrote in his brief. While I disagree with the claims in his brief that a loss of these patents would decrease innovation, he does make an important point: the real problem isn't in what's being patented, it's in patents that shouldn't be granted getting approved in the first place. Furthermore, if the court cuts out all software and business models, people will just rewrite their patents in a manner to make it appear as though their business models and software really have a "technology" component. In other words, the real net effect may be meaningless.

He then argues that it doesn't make sense to create a special "exemption" for software and business models. This is the same sort of thing that many others arguing in favor of software and business method patents claim. It's effectively a "why should we carve out a special exemption for these things?" And they're right. We shouldn't carve out a special exemption -- but not for the reasons they think. Carving out an exemption implies that these types of things really do deserve patent protection, except for the fact that they're software or business models. It's granting the premise that they're patentable. That's a problem.

The real issues is that most software and business model patents shouldn't be granted at all in the first place, but not because they're software or business models, but because they don't meet the criteria of what deserves a patent. They are often neither new nor non-obvious to those skilled in the art -- and patents on them most certainly do not promote progress. So there doesn't need to be a special exemption because they already shouldn't qualify for patents.

As anyone who has worked in business or in software knows, both business models and software evolve constantly over time. They are not static at all, but highly dynamic -- often driven by changes in the market. It is that market that forces the innovation to occur, and doing anything to limit the ability for anyone to change or modify their model or software only hinders that innovation. So, there shouldn't be a special "exemption" for these goods -- it should just be recognized that they are unlikely to qualify for patent protection in the first place.

So while I agree that software and business models should not be patentable, the Bilski case worries me somewhat. If the court does effectively create an "exemption" for software and business models, it's setting a dangerous precedent that could be revoked (or gamed). It also could make things worse for all other kinds of patents. Instead, there should be straightforward rules that apply to all patents that determine whether or not an invention meets the basic criteria of being new and non-obvious and whether or not a patent is necessary to promote the progress of that space. With that sort of recognition in place, you don't need a special exemption at all. It would just make it clear that software and business methods would almost never qualify for patent protection in the first place, while also raising questions about the patentability of many other things as well.

So, in the end, I don't think that software and business models deserve patent coverage -- but I worry that the results of the Bilski case could lead to many more problems for the entire patent system by suggesting that software and business methods get "special treatment." In the end, it seems unlikely that the courts are going to see it this way at all, so a decision in Bilski severely limiting software and business method patents may be a short-term solution, but it would really just be a band-aid on a much bigger problem.
Links to other posts in the series:

Reader Comments

The biggest problem with the patent system right now, in my opinion, is the granting of broad patents covering absurdly simple, obvious stuff, and the difficulty in getting these patents revoked based on prior art.

The second biggest problem is patent trolls who sit on these specious patents and wait for an industry to develop, then go sue everybody without having contributed to the development of that technology in any way. In the past, a company that tried to sue IBM for infringement of some dumb patent they managed to get through, IBM could come back and show how the company was infringing on 20 of their patents and stop it cold. But the trolls, since they don't actually produce anything other than lawsuits, don't infringe on any patents and are thus immune to cross-licensing deals.

All this needs to change. Entrepreneurs and businesses that are developing technology for sale need to be able to do so without fear of some jackass playing the lottery game and reaming them out with dopey patents that shouldn't have been issued in the first place.

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The biggest problem with the patent system right now, in my opinion, is the granting of broad patents covering absurdly simple, obvious stuff, and the difficulty in getting these patents revoked based on prior art.

Exactly. That doesn't change whether it's software or business models, but applies equally across many different kinds of patents.

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Even if a patent just happens to be innovative and non-obvious, the patent may still be a negative loss to the economy.

We have to think first whether if patents are necessary in the first place. Then we can think about adjusting the patent system as necessary to optimize the positive effects.

We know that from research, it is more often than not, unneccessary.

I prefer to be cautious to granting patents. They are monopolies and we know that monopolies don't have a particularly good record for economic welfare and economic growth.

It is probably more prudent to consider other options like promoting economic competitions through clever legal devices like the GPL. Intellectual monopolies are not the only choices when it come to implementing economic policies that can promote economic progress.

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We have to think first whether if patents are necessary in the first place.

I agree with your principles, but I think it's better to move towards fixing the current system rather than let a wound fester while we decide if we need the system at all. I submit that we do not, but getting the whole thing removed will take a long time. Until then, we should make it as harmless as possible.

It is heartening to see you opine that Section 101 should be broadly construed (what it basically requires is that an "invention" be "useful"), but that the true linchpin tests of patentability should be based upon a rigorous application of Section 102 (novelty) and Section 103 (non-obvious).

If, as you say, most software and business method patents are neither novel nor non-obvious, then it would be expected that most applications for these two species of "inventions" would be rejected and patents for them would not issue.

Now, once you learn to accept that "progress" as used in the Constitution is not economic-based your transformation will be complete.

There is no inherent conflict between the existence of patent and copyright law and the economic models you advocate. The distinction between them is your position that business models based upon enforcing patents and/or copyrights are in most instances sub-optimal.

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If, as you say, most software and business method patents are neither novel nor non-obvious, then it would be expected that most applications for these two species of "inventions" would be rejected and patents for them would not issue.

But the problem is that they're not actually judge for novelty or obviousness. That's a huge problem.

Now, once you learn to accept that "progress" as used in the Constitution is not economic-based your transformation will be complete.

I don't believe there's been a "transformation" at all. My views above are consistent with what I've stated in the past... Can you explain what's different?

And, as for the idea that progress is not economic, I don't see how that's possible. I don't understand what definition of progress wouldn't include economic progress.

There is no inherent conflict between the existence of patent and copyright law and the economic models you advocate. The distinction between them is your position that business models based upon enforcing patents and/or copyrights are in most instances sub-optimal.

Indeed. I've always said (more with copyright than with patents) that the issue is always more about understanding the business models rather than changing the law. Once you understand the business models, the laws will simply go away naturally, as fewer people will use them.

That said... in the short term I have no problem with trying to fix the obvious abuses of the system.

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The fact that you have read some of the Bilski et al. amicus briefs is certainly something I would characterize as "progress", a non-economic, intellectual advancement that may help you better hone your views.

BTW, the ACLU should learn that "arts" equates with patents and "sciences" with copyright.

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The fact that you have read some of the Bilski et al. amicus briefs is certainly something I would characterize as "progress", a non-economic, intellectual advancement that may help you better hone your views

Huh? That would suggest that I normally would not have read the briefs, which is untrue.

Besides which it's not just progress. It's progress of "the useful arts and sciences."

BTW, the ACLU should learn that "arts" equates with patents and "sciences" with copyright.

I would argue that's debatable. In fact, I'd argue that's not true at all.

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Not of the useful arts or science...

Darn but you are a hard nut to crack.

Re arts vs science, during the 18th century "arts" was generally synonymous with "artisans". Hence the terms "useful arts". In contrast, "science" was associated with learning and the dissemination of information. I would give you a cite, but numerous ones can be found simply by using the Google search engine.

Merely FYI, I have never made a claim of copyright to anything I have done...though the lawyer in me says that dedication into the public domain might have unintended consequences downstream. I do have a passion for photography, and have posted a few of a free stock photo site. Of course it has a set of incomprehensible, ambiguous, terribly inconsistent licensing terms for end users that raise more questions that they answer. Since I do not support my family by means of photography, I have simply posted a personal modification to the licensing terms that in essence state "Have at it. Do what you want. Make money if you will. I do not care. Enjoy and good luck with whatever you are doing using the photos." For those who feel uneasy (thinking I might be leading them down a primrose path), they usually want something more definitive...in which case I tell them that the broadest category of Creative Commons is fine by me.

In all fairness, however, many are not in my position. Some persons do make a living from writing novels and other labor intensive works intended for mass distribution. I can certainly understand their concern and reluctance to convert their work to digital form given the ubiqutous nature of P2P file sharing. The one thing non-copyright related that does work in their favor is the apparent lack of any electronic product capable of displaying works in digital form while maintaing the "look and feel" of a printed book.

What you digress into is discussed elsewhere on Techdirt, specifically posts on Copyright rather than Patent, and why novelists and musicians needn't rely on Copyright to make a living.

That said, you fail to argue your point that "arts" equal patents and "sciences" equal copyright any further than a vague definition of what these terms referred to in the 18th century. What do those definitions have to do with patents and copyrights and, more to the point, what does THAT have to do with the ACLU's concerns in the matter?

Re:

Re "...Copyright to make a living", Mr. Masnick articulates business models that can be used without the need to rely on copyright protection. I seem to recall Red Hat as an example of a business model where the software is given away, with the payoff being support services to users.

What is missing in such discussions, however, is that not everyone engages in an activity that lends itself to such business models.

Re "arts" versus "sciences", mine was but a passing remark. It is, however, useful to note that some indeterminant amount of persuasive force behind one's argument, and particularly that of a lawyer in a legal brief, is lost when one of the lead off sentences is incorrect. BTW, the ACLU's point is just as some aspects of the First Amendment are reflected in the Fair Use Doctrine under copyright law, the First Amendment should likewise be kept in mind when it comes to patent law. Bear in mind, however, that First Amendment arguments have not received any sort of a significant favorable welcome in matters pertaining to unfair competition claims.

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Not to digress, but I'll not that the models Mike talks about deal with the use of infinite goods, such as music and software, which is trivial to replicate. Mike has never said, for example, that Ford should give away cars and just charge for oil changed; things that are actually scarce are priced accordingly. I'd be curious what activity one might engage in that relies on the artificial scarcity of an infinite good and does not have some other finite good which could be monetized.

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Well, the key bit is that books aren't trivially reproducable. A book is a physical product of deinitive quality and limited quantity.

You might argue that *the content* of the book can be digitized and infinitely reproduced, and I'll grant you that. But I'll note that (1) it's been shown that free digital copies of books drive up actual sales of physical books, (2) even if we allow that some day eReaders will make real books obsolete (as a bibiophile I strongly doubt this is inevitable, let alone near-term) there are some things Clancy can sell which are limited: his attention, his personal expertise, the fact that if you want a new Clancy book you need HIM to write it (which leands itself to a pay-for-service model not unlike most day workers), and (3) NIN just got away with selling LOTS of actual merchandise that was just containers of one sort or another for music they made freely available; books can and will run under the same forces.

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John Clancy writes books for a living. I am not aware of something else he might have that can be monitized and realized by him to pay his bills.

First, as others already pointed out, the book is a physical product.

But you are also incorrect that there are not other things that can be monetized. Just because *you* are unable to think of them, doesn't mean they don't exist. Cory Doctorow has shown that, as a fiction writer, giving away his content totally in the public domain has had tremendous benefits: it's resulted in him getting *paid* to write columns, it's resulted in him getting *paid* speaking gigs, it got him a job teaching a class at USC and it's helped him boost the popularity of his blog (which sells a metric ton of advertising).

The point being there's plenty of "scarcity" involved with an author: it's that author's ability to write more. Giving away a book increases demand for additional writings (and ideas) from that author -- and that scarcity is where the money is made.

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My gut tells me it is unlikely that Mr. Doctorow is receiving as compensation for all the extras he can monitize an amount that even remotely approaches that which Mr. Clancy realizes from his activities as an author.

Were Mr. Clancy to adopt Mr. Doctorow's business model I rather doubt he would see an overall jump in his total compensation.

Now, I am certain that many here can conceive of business models that Mr. Clancy could use to earn a living. It bears mentioning, however, that Mr. Clancy has chosen to pursue a different model because it his situation it provides him what he apparently believes is the greatest opportunity to reward him for his efforts.

Techdirt prides itself on providing services to others that help them realize monetary rewards for their efforts. What seems to get lost in all of the discussions, however, is the simple fact that there are other business models besides those upon which techdirt expounds. What works for one business obviously may not work for another, particularly if the end result is to maximize monetary gain.

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You begin by saying these models can't work in some endeavors, pointing to novelists as your example. When shown that these models do work for novelists, you can only retreat to a gut-reaction that popular authors "wouldn't make more money" with these models, though you have no proof to back up this assertion. You then repeat your original claim, that these models can't work for some yet-undefined endeavor.

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If I may, perhaps you should contact Mr. Clancy and present him with your arguments why his apparent business model is less than optimal for maximizing his financial gain. If, as you suggest, he will be able to achieve his goals using some of the items you monitize, I am sure he will readily embrace the business model(s) you champion.

In the meantime I adhere to the view that he, better than anyone else, is best situated to determine what works best for him.

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If I may, perhaps you should contact Mr. Clancy and present him with your arguments why his apparent business model is less than optimal for maximizing his financial gain. If, as you suggest, he will be able to achieve his goals using some of the items you monitize, I am sure he will readily embrace the business model(s) you champion.

He might. Or he might recognize that the current system allows him to be *lazy* and work less hard for a lot of money. Even though he could earn more money the other way, it would also require some more work.

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My gut tells me it is unlikely that Mr. Doctorow is receiving as compensation for all the extras he can monitize an amount that even remotely approaches that which Mr. Clancy realizes from his activities as an author.

That's comparing apples and oranges, of course.

Were Mr. Clancy to adopt Mr. Doctorow's business model I rather doubt he would see an overall jump in his total compensation.

Really? We've yet to hear of an author who gave away book content for free who hasn't seen a corresponding jump in sales and revenue.

Techdirt prides itself on providing services to others that help them realize monetary rewards for their efforts. What seems to get lost in all of the discussions, however, is the simple fact that there are other business models besides those upon which techdirt expounds. What works for one business obviously may not work for another, particularly if the end result is to maximize monetary gain.

Ah, but you miss the point (and the basic economics). What we say is that there are always ways to increase your monetary income by embracing free, if you do it properly.

But, more to the point, IF you ignore these business models when everyone else does not, you are going to be in trouble.

So, take it to the extreme: if everyone but Tom Clancy gives their content away for free, so people become used to "sampling" and sharing to promote books, then his sales will decrease dramatically.

We're not saying how things *should* be. We're explaining the economic trends of how they *will* be. You can embrace them now and do well... or you can be forced to embrace them later when it will be harder.

It's in society's interest to promote innovation. Patent protection provides a limited period of time for an inventor to recover the investment made to take an idea and convert it to something people will pay money for. If people wont pay money to the inventor, it has no value to society and should not be patented.

I see patents made by people with no intention of making something to sell.

I see companies prolong the life of a patent by getting new patents for the same (minimally different) invention.

Software is something that can be copyrighted, but also passes the test of something people will pay money for once the inventer makes a working model.

Business processes are a different matter. When you develop a business process the result is a business that can be sold. You can maintain confidentiality and retain trade secrets for business processes. a business process is Not something that an inventor develops, its an idea.

Copyright is Unneccessary for the Software Industry

The software industry also shown that copyright is an unneccessary forces in the history and that competition is a better promoter of progress and innovation.

Free software shows us that diverse and innovate ranges of softwares can exist without copyright.

They did however, hack the system of copyright to grant the opposite incentive. Instead of monopolies, they make source code open to the competition.

Nonetheless, they shown the function of protectionism and monopoly powers in copyright law are unneccessary.

It is not the question of what we can do to fix the system but whether the system is necessary in the first place.

In the software industry, intellectual monopolies are unneccessary and can indeed be damaging to innovation and economic progress. Instead,the opposite kind of incentives, embodied in copyright licenses like the GPL are promoter of innovation in the marketplace.

Re: Copyright is Unneccessary for the Software Industry

Kiba wrote:

Free software shows us that diverse and innovate ranges of softwares can exist without copyright.

I'm not so sure. The single most popular Free Software licence is the GPL, and that has as one of its essential principles that of copyleft--that if you redistribute the code, you must make the source available as well.

But the only way to enforce this is through copyright law: the GPL is a licence, and if you don't agree to its terms, then you have no permission to redistribute, because such redistribution violates copyright.

Therefore you need copyright in order for Free Software to remain Free.

Software patents, on the other hand, we can do without. Why do we need two kinds of legal protection for software? Copyright is enough, let's do away with the patents.

Re: Stupid question?

The idea of "promotes progress," as I understand it, is "if creators can't be compensated, they won't produce." Patents themselves *don't* promote progress, but could provide incentives for someone to produce. It has been presented here on Techdirt that this is oftentimes not the case: patent isn't required as an incentive, and as such the negative effects of such a monopoly outweight the (not defunct) benefits of the system.

I'm not totally in agreement with your contention that software is an idea rather than a process, but only because the line between the two seems extremely blurred. I do think that some middle way has to be found; programming languages are rather like laws of physics or chemistry in that there are only a limited number of ways in which things can be done, but a surprising number of minor variations. The closest parallel in finite goods that comes to mind -and you can hardly call them 'scarce'- are 'generic' pharmaceuticals.
On the other hand, allowing someone to reverse-engineer a piece of software and stick a new GUI on it in order to pass it off as their own work is hardly promoting progress, and not particularly good for the economy either.

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I'm not totally in agreement with your contention that software is an idea rather than a process, but only because the line between the two seems extremely blurred

I'm not contending that. The briefs on that side are.

But I will say I actually don't see much difference between an idea and a process -- and think neither should be subject to patents.

I do think that some middle way has to be found;

Why?

programming languages are rather like laws of physics or chemistry in that there are only a limited number of ways in which things can be done, but a surprising number of minor variations.

Hmm. I'd argue that's not the case at all. That software allows for an infinite number of possibilities.

On the other hand, allowing someone to reverse-engineer a piece of software and stick a new GUI on it in order to pass it off as their own work is hardly promoting progress, and not particularly good for the economy either.

I would question both of those assertions. If the reverse-engineering with a new GUI increases the size of the market and or prompts the original creator to then improve his or her software even further, why would that not be good for the economy and why would it not promote progress? Competition has been shown repeatedly to promote progress. Why not here?

I can see where you're coming from, and I think my objection to the idea of outright imitation is the appalling intellectual laziness of it as much as anything else; whilst it might do some overall good in the long run, I can well understand the resentment it would cause to spend one's entire career having to think up new features and concepts not because your rivals were coming up with new and clever ideas of their own, but because as soon as it was out there someone was going to pass your work off as their own and bypass the need to do very much complicated thinking. There doesn't even have to be any monetary gain involved; how would you feel if someone copied and pasted this entire article onto their blog and pretended they'd written it themselves?
I'm all in favour of the GPL and/or Creative Commons. I know the above example isn't representative, and that in real life the line between imitation and innovation is almost never that clear. From a purely logical perspective, I think your position is 100% correct. But the emotional response I've described is a very human one, and patent law is going to have to make some concessions to it even in the infinite/intangible goods field, because it isn't going to go away any time soon.

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I can see where you're coming from, and I think my objection to the idea of outright imitation is the appalling intellectual laziness of it as much as anything else; whilst it might do some overall good in the long run, I can well understand the resentment it would cause to spend one's entire career having to think up new features and concepts not because your rivals were coming up with new and clever ideas of their own, but because as soon as it was out there someone was going to pass your work off as their own and bypass the need to do very much complicated thinking.

But that's not what actually happens. If someone is always only copying what you've done, they're always going to be a step behind you. They're never going to understand the product as well, and your reputation will only improve while there's will decrease.

Look, for example, at the huddlechat story we have on the site today. When that came out a bunch of people got very upset at Google for what they felt was copying. Merely copying harms your reputation, which is very important.

Whereas those who are seen as original get a premium for their work, with or without legal protections.

how would you feel if someone copied and pasted this entire article onto their blog and pretended they'd written it themselves?

There are a bunch of sites out there that do this already, trying to prove this point, as it comes up in conversation repeatedly. If you search you can probably find a few of them. But all it really does is make them look bad. They get almost no traffic, and soon enough someone figures out that it originated here -- and then whoever copied it hurts their reputation seriously.

And it's hard to repair your reputation.

I think your position is 100% correct. But the emotional response I've described is a very human one, and patent law is going to have to make some concessions to it even in the infinite/intangible goods field, because it isn't going to go away any time soon.

I agree that there's a human response -- but it works itself out. Sure, I get a gut reaction when I see people copy this site, but I know that in the end it works out. The copycats hurt their reputation, and if anything, more people end up coming to Techdirt since they learned about it via the copycat.

Re:

That is just not true. I'm a programmer, and my company runs a set of web applications for our customers. They need that service, and the company needs developers to fix problems, add features, improve the applications, and generally meet the customers' needs. We don't distribute our software, and we would be just fine without copyright protection. Even if someone got our code base, what would they do? Set up their own hosting shop and say "I have the same code as XYZ but cheaper!" Anybody who switches to them would quickly find they don't have any expertise with the application, can't offer any meaningful support, and probably aren't planning any improvements. They'd trip over themselves to get back to the original.

However, this does not mean that someone who does distribute their software needs copyright in order to charge money for it. It might be harder, and it would definitely require a different business model, but it would not necessarily be impossible.

And finally, this topic isn't even about copyright at all, it's about patents. Nobody is suggesting that software can't be copyrighted, only whether it should be patentable. And you cannot lump the two together, because they're very different.

Re:

Without copyright or patent protection, there would be no software. Programmers couldn't earn a living.

I think this is a popular myth. Lots of non-tech companies build things in-house to do very specific things. Even if they CAN just copy from someone else, they probably need programmers to make it do what they want, expand it's functionality, and maintain it. Even in tech companies, programmers don't get paid by selling the software; RedHat is my favorite example, because it pays it's programmers with revenue from it's support service.

Re #19 Tom

I am sorry but I find your comment to be quite ignorant.

I am a programming for part of my job here at the place I am working now.
Do I do it because I have a copyright, or does the company have a copyright? I never signed anything saying the company owned it. And I don't really care. I enjoy this job. They probably would never even think of opening up the system. It is just an internally built program to improve the productivity of the team.
The idea that copyright or patents would have ANYTHING to do wih it is simply preposterous.

They need something done so they don't have to hire a billion people to do stuff where the processes could simply be improved and they keep the work force of 10.

Oh, and hobbyists have certainly done a lot of good too. Don't knock em. They have made a lot of fun stuff.

Re: Re #19 Tom

Re: Re #19 Tom

I see your point. copyright and patent protection might be irrelevant for internal use only software.

I also concede your point that hobbyists do a lot of good. I was only trying to say that there is a place for publicly distributed software made by professionals.

Allow me to refine my point (at the risk of your confusing my ignorance with the fact I have an opinion;-). Publicly distributed software needs some kind of protection. I think we can all agree that copy protection schemes generally suck.

I suppose that as a programmer and business owner who needs to make payroll and provide health insurance, I'm biased against freely giving away what we work hard to create.

Re: Re: Re #19 Tom

Allow me to refine my point (at the risk of your confusing my ignorance with the fact I have an opinion;-). Publicly distributed software needs some kind of protection. I think we can all agree that copy protection schemes generally suck.

Why does publicly distributed software need protection?

IBM has built a huge business out of giving away software.

Red Hat has built a decent sized business out of giving away software.

Google has built a tremendous business out of making its software free.

There are plenty of models that work that do not rely on either copyright or patents. They just rely on a basic understanding of markets and economics.

I suppose that as a programmer and business owner who needs to make payroll and provide health insurance, I'm biased against freely giving away what we work hard to create.

But if you could make even more money giving away that software and charging for something else, wouldn't that make sense?

I don't think total anarchy is the answer...

Who's talking anarchy? We're talking about a free market, where supply and demand set the price.

Question for Mike

I am guessing you probably didn't file a brief with the court?

You always have lots of analysis on these ideas and I think it would have been awesome if you did.
I agree with your thoughts and wish the courts would fix things. And I don't mean fix things in the simple "yes" or "no" decision as to whether software and business models are patentable but fix as in address all of the issues you have mentioned in your many previous posts.

Thank you for the analysis and post, this was a big one and well worth reading.

recombination and innovation

What horrifies me about this whole software-and-business-method patent nonsense is the number of half-wits who have never had an original idea in their lives, getting patents for ripping off their customers, by ripping off the public domain.

I feel I have a certain amount of authority in saying this, because I have just written a rather funny short short story aka flash fiction, where I juxtaposed two preceding ideas that were not intended to be so juxtaposed, and wound up with something I felt was quite funny. It's not often that one can crack up over the sentence "Farmers made deliberate attempts to to breed out unwanted features such as large size or aggression." Out of Eden, by Stephen Oppenheimer, pg 34. Of course, that section of the prologue starts out with a reference to Mendel's peas, and so my story ends with the first person narrator saying that a non-aggressive pea would lack flavour.

So I know how people come up with "new" ideas - they put old ideas in different, equally old contexts, where they are "not supposed to be"(TM). It's a basic feature of something called the marketplace, and trade, where you can exchange "war stories" and experiences and how you managed to get on top of such-and-such a problem, as well as goods and services.

In this context, it's rather easy to see why software and business patents are bad - they block off the cross-fertilization of ideas. I presume that blocking off the flow of blood to the brain or the heart, by analogy, would be to these "software patent" and "business patent" fans, a brilliant idea.

The case for patents

As detailed in your outline, the case in favor of patents would seem extremely weak, if not nonexistent. The point that patents favor innovation is demonstrably false. As for the final point, that drawing dotted lines around what can and cannot be patented decreases the effectively of patents, isn't that begging the question of patent effectiveness? Since patents primarily stifle innovation, their "effectiveness" is not a benefit.

Decreasing the benefits of patents would be a good thing indeed. Abolishing them completely would be ideal.

Re: The case for patents

There seems to be an assumption being made by many that patents "stifle" innovation. This necessarily implies a causal connection between patents and innovation stifling.

The patent laws of the United States have been around since at least as early as 1790. Likewise, since that time we have all witnessed an incredibly high level of innovation within our society. Importantly, this cannot be used as "proof" that patents promote innovation. The only honest answer is that innovation and our patent laws have co-existed for over 200 years.

The difficulty with anti-patent sentiments expressed here is that they are likewise unable to establish a causal connection between the presence of our patent laws and the hindering of innovation. Again, the most that can be said is that they co-exist.

Innovation will continue whether or not we have patent laws. For example, I have never met a client who said "I invented this because we have patent laws." Every one of them has said, however, "I invented this because I saw a solution to what I thought was a problem, and I believe my solution may have value in the marketplace." A large number have also said "I would like to try and protect my solution so that I can make a living from its sale, and if I am lucky even be able to build a thriving business around it."

Again, Mr. Masnick correctly points out that there are business models that do not rely on patents in order for the business to succeed. However, these models are not universal and applicable to all businesses.

Re: Re: The case for patents

There seems to be an assumption being made by many that patents "stifle" innovation. This necessarily implies a causal connection between patents and innovation stifling.

There's decent evidence to support that... more on that in my next post in the series, though. :)

The only honest answer is that innovation and our patent laws have co-existed for over 200 years.

That's not the *only* honest answer. You can construct hypotheses and experiments (natural or in the laboratory) to test these things. And people have.

The difficulty with anti-patent sentiments expressed here is that they are likewise unable to establish a causal connection between the presence of our patent laws and the hindering of innovation. Again, the most that can be said is that they co-exist.

Innovation will continue whether or not we have patent laws. For example, I have never met a client who said "I invented this because we have patent laws." Every one of them has said, however, "I invented this because I saw a solution to what I thought was a problem, and I believe my solution may have value in the marketplace."

Indeed. Though, it will change both the nature and the pace of innovation. And if it really is the marketplace that is determining what should be invented, then why should we muck around with that marketplace via the patent system?

A large number have also said "I would like to try and protect my solution so that I can make a living from its sale, and if I am lucky even be able to build a thriving business around it

Which assumes, incorrectly, that the only way to build a thriving business around it is to protect it. But just as merchants realized in the 1700s, protectionism shrinks your market, rather than growing it. It makes it easier to be lazy, but not to be good.

Again, Mr. Masnick correctly points out that there are business models that do not rely on patents in order for the business to succeed. However, these models are not universal and applicable to all businesses.

Basic economics are universal and are, in fact, applicable to all businesses.

Wow!

This is a regular comment hurricane! I do agree that it might very well be the time to revisit patenting software and its ilk, as it seems like there is too much money and effort that goes into both making and defending them.

Expression v. Function

Mike, you constantly amaze me with your irrational thought processes. You have a religion which is anti-patent, just as many are anti-evolution.

I have known many really sharp people who can apply analytical reasoning skills in the sciences while ignoring those abilities when it comes to their religion. They compartmentalize, kind of like a split personality.

Copyright is useful for protecting one's specific expression. But it does nothing if someone sits down and recodes a piece of software in a different language. The recoded software would have the same function but the code itself would generally look much different.

A patent covers function. So a patent would protect from the kind of copying I just described.

The problem with most software people today is that they recode things all the time and want to claim that they are creative. In a way they are, creative at rationalizing theft form others.

We all know that practitioner's abilities in any profession will follow the Bell Curve. Some will be incompetent (like your grasp of the invention process), the majority will be just average, and a few will be exceptional. Of course no one wants to think of themselves and their work as being average.

But we do know that the reason the software crowd is so anti-intellectual property is that most of them know that they do not have what it takes to produce an honest o goodness invention.

Re: Expression v. Function

Mike, you constantly amaze me with your irrational thought processes. You have a religion which is anti-patent, just as many are anti-evolution.

Ronald, I'm confused on this one. I'm the one who continually backs up my arguments with evidence. You simply declare things to be true and have NEVER presented a shred of evidence.

Which one seems more faith based?

Copyright is useful for protecting one's specific expression. But it does nothing if someone sits down and recodes a piece of software in a different language. The recoded software would have the same function but the code itself would generally look much different.

Ronald, did you even read the post? I didn't say anything about copyright in the post.

Also, did you miss the part where I said software shouldn't be treated differently? Or did you just take it on "faith" that that's what I must have said?

But, more to the point, why is it problematic if two people code separate pieces of software to do the same thing? I thought that was competition, which was the root cause of innovation in this country.

Are you really against capitalism?

The problem with most software people today is that they recode things all the time and want to claim that they are creative. In a way they are, creative at rationalizing theft form others.

You keep claiming this. I'm sure it helps you attract more donations, but you have yet to show any proof. You also fail to respond every time it's pointed out that theft and infringement are different.

If anyone's living in their own "faith-based" world, it would appear to be you.

But we do know that the reason the software crowd is so anti-intellectual property is that most of them know that they do not have what it takes to produce an honest o goodness invention.

Ah, yes. That's why among those who are against software patents are the most innovative companies in the world.

Wesley is right

In 1998, Kenneth Kiron and Kevin Bander, the founders of Mopex Inc., received a patent on an "open end mutual fund securitization process" that would allow such funds to be traded on an exchange. The Patent Office approved of their application despite the fact that exchange-traded funds had already been around for years!
In August 1999, the American Stock Exchange decided that the best defense was a good offense. It brought an action against Mopex seeking a declaratory judgment that the patent was invalid.
One of the non-obvious effects of the expansion of the idea of "patentability" in the area of finance is that the tests of novelty have gotten tougher. Judges use such ideas as "prior art" in order to accomplish the same goal that the "business method" constraint on patentability once accomplished—in order to prevent the clogging of the arteries of commerce.
Accordingly, in February 2003, the federal district court in Manhattan ruled in favor of the AMEX and invalidated the Mopex patent. This case examined whether Morgan Stanley's filing with the Securities and Exchange Commission in 1994 regarding what it then called World Equity Benchmarks, or WEBs, qualified as an example of a publicly accessible publication that could serve as prior art to invalidate the Mopex patent. The court found that it could and did, noting that the WEBs application covered or "anticipated" all of the claims asserted in the ETF patent Mopex claimed as its invention.
Anyway, I do think that just the fact that a lot of time and money had to be expended in fighting the Mopex claims was a social loss, and that although the tide is turning against such claims, we really need to see that go a lot further, and expose a lot of the beach that has long been flooded.
Here's one discussion that may interest some of you. Registration is required, but is free.

1) Lets say someone designed a method of displaying colored circles on a screen and having a user press a hardware button when a scrolling dot collides with the displayed circles, which are in sync to music and if the button is pressed at the right time, causing the proper note of the music is played - just like with guitar hero. Would you say that this idea for an intuitive interface for the game is patentable or not? I ask because it's implemented in software, which it appears you are against such software patents.

2) Now, if software patents weren't allowed, then that would mean that every other game maker would be able to simply copy guitar hero's interface free of charge, and wouldn't you agree that due to the popularity of the game, that this is exactly what other game makers would do because the interface has already proved to be a success?

3) Now, lets say there is a patent on GH's interface. Since GH is such a big hit, other game developers would naturally want some of that market, so since there is a patent on the GH interface, that fact will actually encourage the other game makers to innovate another intuitive way to interface the user with the music so they could enter the market to get around the patent. Thus, the patent actually was the reason for innovating a new user interface instead of simply copying the interface if there wasn't any patent on it - thus the likely-hood and incentive to design another interface would be much less if there wasn't a patent - and maybe the newer interface adds a significant advantage over the GH method! Don't you agree?

My whole point is that a program that performs a simply math equation like 2+2=4 should not be patentable. But, unique ideas (like GH interface) that can only be produced using software should be patentable because it's a unique idea.

Also, Patents DO significantly help produce innovation because:
1) Most innovations wouldn't make it to the market without funding, and most VC's wont fund unless there is a patent on the innovation to minimize the risk of failure due to competition.
2) If an patented innovation turns out to be a success, there is now a real reason for competitors to innovate and create a new way into that market. If there were no patents, then there would be less incentive to innovate something new if the current technology works and is making money. In other words, if a company had a choice between these, which do you think they would take:

1) Copy an idea that isn't patented and share in the profit from that market
2) Come up with a new idea, but don't patent it, so if the new idea is a hit, you will soon have competition and have to share your profits with copycats.
3) Come up with a new idea and patent it, and reap all the profit from the new market.

As you will soon see, anyone choosing #1 will produce zero innovation. And if a company is going to spend money to develop a new innovation, what option between 2 or 3 offers the greatest incentive to spend money for innovation? Yes, there could be other incentives to innovate besides patents. But, it's simple math - in EVERY CASE a patent is an incentive to develop an innovation - period!

Re:

So, here's what I'm seeing... Guitar Hero has an intuitive interface (though I'll note that THEY didn't come up with it: see also every other rhythm game made in the last decade, I believe starting with DDR).

On the one hand we don't patent it and come up with a standard interfeace for these games, which makes them easier to develop and easier for customers to use, which means more people will be making and playing these sorts of games. Since you can't just coast along having the nicest interface, you have to actually improve the gaming experience to compete.

On the other hand, we patent the interface, and now anyone who wants to make a rhythm game needs to come up with some other way to interface with the user, meaning that they don't just have to improve on the game but they have to build the whole experience from scratch. What's more, players are already used to Guitar Heroe's interface and are going to be disinclined to play a rhythm game who's controls are different. So now there's extra cost in making the game and a smaller section of the market who's even going to play it. Fewer people play the game, fewer people make the game, and the market shrinks. Meanwhile, Guitar Hero can make three of four 'sequels' whose only 'improvement' is new songs, rather than having to actually improve the game to compete.

It's not true that all the Patents should be doing is maximizing the reward for innovators; we also have to balance against the public good. Yes, if you give me a choice between $5 and $2, I'll take the $5, but such simplistic reasoning misses important pieces of the bigger picture.

Patents do always offer an incentive, but they close off the market, too. Now instead of forcing a proven innovator who's making money (Guitar Hero) to continue innovating to keep their lion's share, you're forcing unproven talen to make innovations in the same area as we've already had, while the incumbent sits around soaking up revenue.

Re:

Would you say that this idea for an intuitive interface for the game is patentable or not? I ask because it's implemented in software, which it appears you are against such software patents.

Perhaps I didn't make myself clear. I'm pretty much against almost *all* patents. I don't necessarily think software should be treated differently than other types of patents -- so the question is somewhat meaningless. No, I do not think that this idea for an interface should be patentable, because I don't think it serves anyone any good to give a monopoly on a computer interface -- even the original creator of that interface.

Now, if software patents weren't allowed, then that would mean that every other game maker would be able to simply copy guitar hero's interface free of charge, and wouldn't you agree that due to the popularity of the game, that this is exactly what other game makers would do because the interface has already proved to be a success?

That's what we like to call competition, and generally, capitalists think that's a good thing. It pushes companies to innovate. You make it sound as though everyone else could instantly copy GH and take away Activision's marketshare. But reality has a way of interfering with those plans. GH has a reputation and a fanbase and knows its market and its product quite well. Copycats need to go above and beyond that to actually get people interested. And, while they're doing that, one would hope that Activision is already working on the next *better* version of GH in order to better compete against those in the marketplace.

It's easy to say that others would copy it, but it's much harder for mere copycats to actually get anywhere in the market.

Now, lets say there is a patent on GH's interface. Since GH is such a big hit, other game developers would naturally want some of that market, so since there is a patent on the GH interface, that fact will actually encourage the other game makers to innovate another intuitive way to interface the user with the music so they could enter the market to get around the patent.

That's an extremely misleading way of looking at it. What you're basically saying is that rather than letting someone improve on the wheel, they now need to reinvent the wheel. Don't you see why that's inefficient? What's wrong with letting regular competition work its course?

Thus, the patent actually was the reason for innovating a new user interface instead of simply copying the interface if there wasn't any patent on it - thus the likely-hood and incentive to design another interface would be much less if there wasn't a patent - and maybe the newer interface adds a significant advantage over the GH method! Don't you agree?

No, I don't agree at all. What you're basically saying is that we should be putting artificial obstacles in people's paths in hopes that that leads them to route around the obstacle in a different way. Why would you ever want to make markets less efficient that way?

1) Most innovations wouldn't make it to the market without funding, and most VC's wont fund unless there is a patent on the innovation to minimize the risk of failure due to competition.

This is simply untrue. It's falsehood that's been repeated time and time again -- and every time I debunk it. While there are a few VCs who feel that way, we've seen that the tide has shifted, and VCs generally are much less interested in patents. We've even pointed to example after example of VCs pointing out how patents distract their portfolio companies. They're a waste of money and most smart VCs know that.

Good VCs don't look at patents. They look at the team and its ability to execute.

If an patented innovation turns out to be a success, there is now a real reason for competitors to innovate and create a new way into that market. If there were no patents, then there would be less incentive to innovate something new if the current technology works and is making money.

You make that claim, but the research actually suggests this is incorrect. Part of the reason is that patents today are written so broadly as to the point that you really *can't* innovate around them (see: NTP's patents). But, the other issue is that, as I pointed out above, you're adding an unnecessary obstacle in the path of innovation. Look at the history of the steam engine. There was almost no USEFUL innovation in steam engine technology until after the patents went away -- and then it all happened quickly. That's because no one could market the innovations they came up with to make the steam engine USEFUL while Watt still held his patents.

Innovation is an ongoing process, and it does involve lots of people pulling from ideas of others -- but it's the marketplace that should reward the real breakthroughs that make something useful in the marketplace. We shouldn't have the gov't granting monopolies on just that first step in teh process.

1) Copy an idea that isn't patented and share in the profit from that market

That seems like a rather dumb way to build a business. You'll always be behind the innovator in the marketplace, and it will be tough to establish very much marketshare. Yes, some will do it, but they won't do very well.

2) Come up with a new idea, but don't patent it, so if the new idea is a hit, you will soon have competition and have to share your profits with copycats.

If you recognize that it's a new and growing market, then you'll also recognize that having others help build up that market can only help you as well. It helps to legitimize the market and spread the marketing costs.

3) Come up with a new idea and patent it, and reap all the profit from the new market.

That's not a particularly realistic scenario, as you now have shouldered the entire marketing burden, and without the ability to have real competition to help drive the innovation necessary to figure out what the market really wants.

As you will soon see, anyone choosing #1 will produce zero innovation.

Actually, that's incorrect, but nice try. I've already pointed out that there are numerous examples of places that did not have a patent system that showed plenty of innovation. So to claim otherwise is historically incorrect. Go read Eric Schiff's book on this matter.

And if a company is going to spend money to develop a new innovation, what option between 2 or 3 offers the greatest incentive to spend money for innovation? Yes, there could be other incentives to innovate besides patents. But, it's simple math - in EVERY CASE a patent is an incentive to develop an innovation - period!

Again, you say that, but it shows a near total misunderstanding of both how innovation and markets work -- and all of the research on this topic.

What you say MIGHT be true if innovation was a once-and-done sort of thing. You come up with something new, and bam! you sell it. But that's not what happens. You build something new, and some people like it, but many don't. So you adjust. And you tinker. And you adjust some more, and you see what the market thinks. And someone else comes along and they offer something a little different, and it gets a little more tractions. So you learn from that as well, and you offer something a little different and better, and the market likes that better... and so on and so on and so on.

Innovation and markets develop through competition.

Not monopolies. History has shown this time and time again, and the economic research makes this quite clear.

Your notion of "invent and the market is done" is simply not an accurate portrayal of how markets actually work.

Innovation does not equal marketability

You claim innovation requires patenting to get capital. Well, with software (and many other areas) this is simply false.

How many significant innovations have you made in your life, that you can claim this? I have at least a dozen, most of which have never seen a patent office (save in some cases as prior art defenses against Johnny come latelies who have tried to hold up others using ideas I published long before. The ideas get out, and contribute to technology. They are for darn sure innovation, and do not or did not need patents.

More of Mike's Prattle

Every time I read stuff like the following from bloggers like Mike I get very amused. Here is the quote from Mike:

"... companies like American Express and Accenture trot out the claim that patents have tremendous beneficial impacts on the economy (again, without proof)."

Does anyone actually think that American Express and Accenture would "claim that patents have tremendous beneficial impacts on the economy" without proof? You have to conclude that either both very successful high profile companies are either lazy, stupid, or ignorant -or- that Mike simply hasn't bothered to read what they have produced to back up what he claims is their claim. Or maybe neither firm has made such a claim and Mike simply constructed a straw man, a common tactic he employs.

Re:

Mike, everytime a company or person makes a statement - they don't have to provide proof for each and every aspect of their statement. Imagine if you had to do that!

Scorpiaux made a very clear claim: that I had lied about AmEx and Accenture not providing any proof concerning patents helping innovation. He's incorrect. He made a claim that is easily verified by reading the filings -- and I pointed out that, contrary to his point, my original statement was correct. Neither firm provides proof, they just assert that it must be true.

"Scorpiaux made a very clear claim: that I had lied about AmEx and Accenture not providing any proof concerning patents helping innovation. He's incorrect. He made a claim that is easily verified by reading the filings -- and I pointed out that, contrary to his point, my original statement was correct. Neither firm provides proof, they just assert that it must be true."

I agree. But I think Scorpiaux's main point was that it was ridiculous of you to even suggest that their claim shouldn't count just because they didnt' provide the proof. Please don't try to deny that that wasn't the exact intent you were trying to convey with your "(again, without proof)" remark.

Re:

But I think Scorpiaux's main point was that it was ridiculous of you to even suggest that their claim shouldn't count just because they didnt' provide the proof.

I would think, in a legal filing, when there's a ton of evidence suggesting one thing -- and you go out and claim the exact opposite as being absolutely true without a shred of evidence... then yes, that should raise questions about what you've written.

"That's what we like to call competition, and generally, capitalists think that's a good thing. It pushes companies to innovate."

This is where I think your thinking is way out of whack with reality. With your thinking the only players capable of offering competition in a market would have to already be established companies with money to market, proven marketing and development abilities and all they have to do it innovate a better version of an idea to offer such compedition in a market.

But, the reality is that 60% of patent come from individuals not assocoated with companies. And as you know 95% of new companies fail in the first 2 years of business due to insufficuent funds, bad management, poor marketing ect. So, with all these odds stacked against the individual inventor, the chances are their invention won't make it to market if they didn't had an "advantage" that helped them to play on the same field as already established players.

The monopoly that a patent offers helps tilt the scale to the individual's inventors advantage to increase the chances that their invention can make it to the market.

If you eliminate ideas coming from individual inventors (by removing this one advantage a patent offers), then the only innovation being produced will be from the already established players - and that amounts to only 40% of the ideas being created - the other 60% will never be realized if there wasn't soemthing to help those individual inventors bring their ideas to the market.

No matter how you looks at it, there is equal evidense for both views of the patent issues. And this balance just proves that the patent system is probably just right as it is.

Re:

With your thinking the only players capable of offering competition in a market would have to already be established companies with money to market, proven marketing and development abilities and all they have to do it innovate a better version of an idea to offer such compedition in a market.

Not at all. In fact, I think just the opposite. Time and time again, we've seen small upstarts come out of nowhere and out innovate, out-market and flat-out beat the competition by being smaller, more nimble and more responsive to customer needs.

It's the big companies with the big budgets who are slow, tied to legacy ways of doing business, and unable to respond to customer needs.

But, the reality is that 60% of patent come from individuals not assocoated with companies.

Ah, the fun of stats in the aggregate. First of all, why should it matter how many patents come from companies associated with companies? But how many useful patents come from companies vs. individuals? How many patents that actually provide breakthroughs come from individuals or companies?

And, it what other world would we tell someone who has a good idea NOT to form a company or NOT to work with a company to make that idea a reality.

Why should we reward someone for NOT working to bring an idea to the market?

And as you know 95% of new companies fail in the first 2 years of business due to insufficuent funds, bad management, poor marketing ect.

Again, a rather meaningless stat. First off, the 95% stat is incorrect, though widely repeated. Second, most of those types of "failures" are actually about things like people opening a restaurant or a dry cleaner shop. When you get down to the % of technology companies that fail, the numbers are quite a bit different.

So, with all these odds stacked against the individual inventor, the chances are their invention won't make it to market if they didn't had an "advantage" that helped them to play on the same field as already established players.

You're blaming everything else but the invention for not making it to market. But that's not how it works. As anyone who has ever started a business will tell you, what you end up doing is quite different than what you started doing. The *invention* is pretty close to meaningless, because the real trick is making a product that people want. It's an ongoing process, and the initial spark of invention, in the end, has little to do with the final product.

And, again, there's little evidence to support your position that small inventors need patents to take on the big companies. As we've seen time and time again, those big companies are slow and unable to react like small ones do. If you can actually *innovate* (not just invent) and serve customers, you can do better than a lumbering big company.

The monopoly that a patent offers helps tilt the scale to the individual's inventors advantage to increase the chances that their invention can make it to the market.

Again, it's got nothing to do with the *invention* and everything to do with the innovation to make it into a useful product. And you don't need the patent system to tilt the scales. The evidence suggests it's not necessary. In fact, the evidence suggests exactly the opposite of what you're saying. It shows that in places (or industries) without patents there is MORE competition, there are FEWER big dominant players, there are MORE smaller competitors and there is MORE innovation.

If you eliminate ideas coming from individual inventors (by removing this one advantage a patent offers), then the only innovation being produced will be from the already established players - and that amounts to only 40% of the ideas being created - the other 60% will never be realized if there wasn't soemthing to help those individual inventors bring their ideas to the market.

Again, that's not what history has shown.

With patents, you get LESS competition, because rather than competing the really inventive small guys can sit around and do nothing to help innovate. That lets the big companies scoop up patents and not have to face competition from the really innovative guys.

You're DECREASING the competition and shrinking the market. That's not good for small inventors at all.

No matter how you looks at it, there is equal evidense for both views of the patent issues. And this balance just proves that the patent system is probably just right as it is.

Oh really? I've yet to see the citations on the research that supports your viewpoint.

patent reform

Would all you gentlemen who have never invented anything, never been through the birthing of a new idea in your lives, have no personal experience in patent prosecution or law, or who are employed by or receive compensation for your writing from a large tech firm who frequently is found guilty of infringing patents of other parties (especially small entities) please leave this forum?...................

Re: patent reform (stv)

The Bottom Line...

If patent trolling is a good thing, then leave the laws as they are. That's really the Bottom Line. Status Quo == The Current Situation. I for one don't see a benefit to anyone other than a gaggle of lawyers who've bought up a bunch of worthless patents that the current law situation regarding same is useful to anyone else. And lord knows we all live to make lawyers rich. I mean what higher calling is there in life?

Patent Reform

Consider:
1)Submit ideas to a patent repository.
2)A patent tax on an industry is the source of compensation
for patents in an industry.
3)Scoring of patents from multiple sources provide the
basis for distributing the patent tax revenue.

accenture

hi mike. you should look into accenture violating employees first amendment rights by making them take off line the blogs they wrote that might not be considered favorable to Accenture's partner companies. They threaten termination. If that's not a violation of the 1st Amendment then i'm not sure what is.

Business models are patentable with software

Here is some food for thought...

If a software system that carries out a business model is pushed through the the internet, others can see it, copy it and reuse it. Not legally mind you but it happens. If this happens, how can the writer protect themselves? Copyright? That's not possible. You can rearrange and paraphrase software to get the same result so by that account carry out the same task. The only way to protect something new is to patent it because if you expose it, others will copy it silly.

How about highly complex business models? Some business models are so complicated they might only be possible by computer.

Contrary to your position, so many people do create new uses for software to do something new. It's got nothing to do with the actual software that carries out the work, it's the idea that accomplishes a novel activity and the fact that software accomplishes the novelty is just a part of it.

Take for example that physical patents are sometimes so simple yet enforceable. For example, Stratasysy has a patent on putting an enclosure around a 3D printer to keep it heated like an oven. An oven existed prior. So did a 3D printer. Whats so novel about this patent? Any decent engineer would understand that heat is important to thermoplastic. Duh!

In contrast, creating a new e-commerce method built around 3D printing which itself has a very different requirement set than traditional ecommerce. Why should a business model that literally requires software to carry it out not be patentable?

What would you say to this scenario:

Someone in the year 2027 realizes that time travel is possible and to do it requires math in a computer system to accomplish it. The software turns out to be the key to making it work...then what?

Finally, if an inventor tries to commercialize a product and it didn't exist prior to his or her disclosure and startup, and another person starts a business just like it after you patented it, spent time and energy and money writing the patents, thinking it through and creating a working system only to have it stolen by someone else who sees it and copies it then where is the justice AND incentive to pursue it?